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Are you considering a home reversion scheme?

For seniors investigating their options for finance during their retirement, home reversions schemes might come up as a potential option.

A Home Reversion Scheme is not a loan but is more accurately described as a real estate transaction – you are selling a portion of your home. The transaction does not come under the Credit Act and its consumer protections.

Home reversion schemes in Australia are only available in Sydney and Melbourne and even then not in all postcodes.

It is a part sale of a future share of the sale proceeds of the home, at a discounted rate against its future value. The amount the Home Reversion Scheme owner actually receives of the original percentage when the home is sold, varies over time and depends on sale price – sounds complicated? Yes, it is.

An example

A 70yo female seeking to access 10% of her home valued at $500,000 (ie $50,000) will be asked to sell the Scheme a substantially larger portion of the future value of her home.  The percentage actually payable at the time of the subsequent sale of the property is subject to many variables and potential outcomes, although limited to the actual proportion sold, can be hard to forecast.

Reversion schemes offer lump-sum funding only.  Although lump sums are available via a reverse mortgage our experience is that most people (in excess of 90% of our clients) want not only a lump sum but also to set aside funds for future use by way of line of credit and/or a regular income stream for a predetermined period of time.  These options can be set up at the time of the initial application and eliminate the need to reapply to the lender for more funds later.

This flexibility is also important as it relates to overall costs as interest on a reverse mortgage is calculated on the amount drawn. So, if you don’t want all the available funds upfront the overall interest expense will be lessened by taking it as you need.

It is worth noting that Home Reversion Schemes may offer a higher lump sums than the amounts allowed by a Reverse Mortgage lender.

In our opinion, a Reverse Mortgage compared to a Reversion Scheme can provide you with more flexibility and options to meet your long term needs.

Are you interested in finding out your finance options in retirement? Contact us today for a discussion with an expert who can listen to your needs and find the right solutions to fit.

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Lowest Rate Reverse Mortgage

EXCLUSIVE OFFER – Lowest interest rate with Nil Application fee for a limited time. This is an exclusive offer that only Reverse Mortgage Finance Solutions advisers can provide. Please call 1800 001 020.

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How Reverse Mortgage Helps Fund Aged Care at Home

Many Australian seniors would prefer to stay at home during retirement instead of moving into an aged care facility. If you’re eligible for a Home Care Package but you just need some help with your added expenses or other necessities to ensure comfortable living, a home equity loan might be able to provide a valuable assistance.

Are You Eligible for a Home Care Package?

In general, the Australian government will assess your eligibility for a home care package. And once you are assessed as eligible, you will receive a letter of approval from My Aged Care, which contains the level of home care package that you will receive. You will also be placed in a national priority queue for home care packages. Someone will also keep in touch with you to inform you when a suitable package is already available.

While waiting for your home care package, you can begin searching for accredited home care providers in your area and work on the numbers. Remember, not all providers are the same, so you must meet them to level your expectations. This is also a good chance to see the available services that they can offer.

[Related Post: Use your Home to Stay at Home]

Your Home Care Package May Not Be Enough

Once a home care package becomes available, My Aged Care will inform you about the details of the services. There’s a possibility that the Home Care Package assigned to you may not be enough for your retirement.

Remember, the government subsidises aged care services in Australia. And depending on the results of your assets test, you might be expected to contribute towards the cost of your home care. The cost that you will have to shoulder will depend on the package or funding program.

Meanwhile, your provider may also ask you to contribute towards the cost of the services you receive. Hence, if you have been assessed as capable of contributing to the cost of your services, you should do so before receiving the home care services.

Your home care service provider may ask you to pay the following:

  • An income-tested care fee (depending on your retirement income)
  • Basic Daily Fee of up to 17.5% of your age pension

While commendable, the Home Care Package may not be enough especially for seniors with reduced income. Many seniors who have already stopped working and don’t have enough fund on their super may find it difficult to make ends meet. Plus, the cost of retirement living can be high as you have to pay for medical expenses and home renovations to allow easy and comfortable living.

Luckily, there are alternative financial solutions available for seniors who are assets rich but cash poor. One of these alternatives is the home equity loan also known as reverse mortgage loan.

What is a Reverse Mortgage and How It Can Help Seniors?

Many Australian seniors have worked hard for years and paid off their mortgage, which comprises much of their wealth.

[Related Post: EXPLAINER VIDEO – Australian Reverse Mortgages]

Through a reverse mortgage loan, a senior can unlock that wealth – not all of it – but a portion can be used to finance retirement needs including paying off counterpart for home care services. However, seniors can use the loan proceeds in anything they want like paying off their debt, renovating home, or even paying for a holiday.

One great feature of a reverse mortgage is that you don’t have to move out from your home, which makes it a great match for supplementing a home care package.

Consult A Reverse Mortgage Broker Today

Retirement is a crucial phase in life, so it is vital that you consult with an reverse mortgage broker about your finances. For face-to-face financial consultation, or if you want to know more about how you can use a reverse mortgage loan, you can call Reverse Mortgage Finance Solutions at 1800 001 020. You can schedule an appointment with our loan experts who will go the extra mile by visiting you at your home.